How does demonetisation help in controlling …

Demonetisation refers to withdrawl of money in circulation as a legal tender. Through demonetisation people deposits cash in bank which reduce their purchasing power and consequently demand.Now people demand less. Producer also started supplying less. So less money spent. Through this supply of money reduces. New notes of 2000 and 500 also printed less as compared to total money in the country. Demonetisation combats black money. So to reduce black money in the economy so many limitation is imposed on people regarding exchange of money. More money with people and less time of converting it into cash , money remain deposited in the bank. Also from this supply of money reduces. Demonetisation results in withdrawl of black money and through this people's black money goes in the hand of govt. which also reduces supply of money.